10,000 jobs axed at BT as 1000 bankers go too

BRITISH Telecom axed 10,000 jobs and more than 1,000 City bankers were facing unemployment tonight as the full impact of the economic downturn took hold.

The communications firm will get rid of 7,000 workers in Britain and another 3,000 across the world, with analysts warning that more will follow throughout the economy.

Meanwhile, Royal Bank of Scotland and Morgan Stanley are cutting about 750 and 250 investment banking jobs respectively in the latest round of City redundancies.

RBS, owner of NatWest, is cutting 15 per cent of its 20,000-strong global banking and markets division in the next few days while Morgan Stanley is moving to cut 10 per cent of its worldwide investment banking workforce.

The dramatic scale of the BT cuts — mostly among agency and contract workers — came in a week which has already seen 5,000 jobs go in big businesses. Hi-tech industries have taken the brunt of the downturn, with Virgin Media, Yell and Vodafone all shedding jobs this week.

Analysts said today that mass unemployment is now a serious threat to the economy, with the total number of jobless increasing rapidly.

According to some predictions as many as three million could be out of work by next year.

Dr Gerard Lyons, chief economist and head of global research at Standard Chartered bank, said: "Clearly there will be more job losses to come. Our guestimate is that unemployment will rise to about 2.5 million.

"If you're running a company and you've got reduced sales, tighter cashflow and you're pessimistic about the future, of course you are going to shed staff."

The BT move follows an unexpected profits warning last month and yesterday's news that unemployment in Britain had risen to its highest level for 11 years with 1.83 million people out of work.

BT said it had already cut 4,000 jobs since April and the remaining 6,000 posts would go by March.

It has a global staff of 160,000 and expects to make most of the cuts in its direct workforce by not replacing staff who leave.

Chief executive Ian Livingston said the cuts were part of an ongoing efficiency programme. He said: "This reflects the fact that our prices have been falling every year for several years. But we also anticipated reasonably early on that economic conditions were worsening."

The cuts precede talks between Gordon Brown and world leaders in New York this weekend over the global economy.

A spokesman for RBS said the scale of its cuts has not been finalised: "We constantly review our operating model to make sure that it is appropriate to the market condition and take action accordingly."

It is understood that redundancies at RBS are likely to happen within the next four weeks.

American banking giant Morgan Stanley said: "The firm is resizing its cost base and headcount to match current opportunities in the marketplace."

An estimated 6,000 people work for Morgan Stanley in London, of which about half are thought to be in investment banking.